Future of perceived price fairness research in hospitality

In: van der Rest, Jean-Pierre, Wang, Xuan Lorna orcid:0000-0003-4710-3579 and Heo, Cindy (2014) Future of perceived price fairness research in hospitality. In: The Routledge Handbook of Hospitality Management. Routledge, London, UK, pp. 134-154. ISBN 9781138071469

Abstract

Prior to the First World War, public pricing policy was essentially of no concern to officials and politicians in the UK/US. Trade associations performed functions that ran afoul of antitrust laws (Scherer and Ross, 1990). Price-fixing, secret price-shading and other collusive pricing behaviour were subject only to the restraint of trade doctrine, 'interpreted in such a narrow way as to make almost anything legal' (Mitchell, 1978: 20). This changed rapidly during the two world wars, when severe shortages forced governments to act and regulate prices to stop 'profiteering', prevent wage/price inflation and ensure that the poor could buy their rations. Moreover, under wartime conditions, the pursuit of private interest was perceived as less acceptable and gradual shifts were occurring in political viewpoints on the welfare implications of monopolies (power), admitting the danger of detriment to the consumer. Therefore, official committees were established to investigate the desirability of restraints such as resale price maintenance and tying. Laws were enacted and courts rendered judgements that altered prevailing views as to what was (socially) desirable in pricing and what was not. As a result, collective price agreements were gradually outlawed and firms were forced to look afresh at their pricing practices. This initiated a whole new body of literature prescribing what businessmen should do in setting prices (e.g. Dean, 1950; McNair and May, 1957; Lawyer, 1963; Abrahams, 1964; Sampsom, 1964; Hinkle, 1965; De Vos and Schomer, 1966; Walker, 1967; Darden, 1968; Oxenfeldt, 1975).